Were low interest rates the underlying cause of the financial crisis? In the previous unit, we discussed the securitization of mortgages. The Economist magazine article entitled, “Crash Course” detailed that: “Investors sought out these securitized products because they appeared to be relatively safe while providing higher returns in a world of low interest rates. Economists still disagree over whether these low rates were the result of central bankers’ mistakes or broader shifts in the world economy.” "Crash Course". The Economist. 2013. Retrieved from: http://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article Reflect on the information in the article and prepare a short answer to the following question: Were low interest rates the underlying cause of the financial crisis? Explain.
Were low interest rates the underlying cause of the financial crisis?
In the previous unit, we discussed the securitization of mortgages. The Economist magazine article entitled, “Crash Course” detailed that:
“Investors sought out these securitized products because they appeared to be relatively safe while providing higher returns in a world of low interest rates. Economists still disagree over whether these low rates were the result of central bankers’ mistakes or broader shifts in the world economy.”
"Crash Course". The Economist. 2013. Retrieved from: http://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article
Reflect on the information in the article and prepare a short answer to the following question:
Were low interest rates the underlying cause of the financial crisis? Explain.
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